Explain how Government Policy functions as a factor deciding location of  industries. 

Government policies encourage or discourage manufacturing activity in certain loca­tions or regions and the control is very strong in planned economies. While the government may encourage establishment of industries in some regions in order to achieve a regional balance or oth­erwise, it may discourage such development in some other areas. The pattern of industrialization may be influenced by the government through either selec­tive taxing or tax rebates or by clear-cut direction to the manufacturers. The government policy has become a very significant factor affecting the distri­bution of manufacturing activity as the governments in most countries stress balanced growth of all parts and a general dispersal of industry.